PURPOSE: to undertake a codification of Council Regulation (EC) No 2271/96 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom. PROPOSED ACT: Regulation of the European Parliament and of the Council. ROLE OF THE EUROPEAN PARLIAMENT: The European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council. BACKGROUND: Council Regulation (EC) No 2271/96 has been substantially amended several times. Since further amendments are to be made, that Regulation should be recast in the interests of clarity. For this reason a codification of rules that have frequently been amended is also essential if the law is to be clear and transparent. CONTENT: the purpose of this proposal is to undertake a codification of Council Regulation (EC) No 2271/96 of 22 November 1996. The new Regulation will supersede the various acts incorporated in it, fully preserving the content of the acts being codified. At the same time, it is also appropriate to make certain substantive amendments to Regulation (EC) No 2271/96, with a view to delegating powers to the Commission. Therefore, the proposal is being presented in the form of a recast. Develop world trade and progressive abolition of restrictions on international trade: the proposed Regulation provides seeks to provide protection against and counteracts the effects of the extra-territorial application of the laws, regulations and other legislative instruments specified in Annex I, and of actions based thereon or resulting therefrom, where such application affects the interests of persons, referred to in the Regulation, engaging in international trade and/or the movement of capital and related commercial activities between the Union and third countries. A third country (the United States of America) has enacted certain laws, regulations and other legislative instruments which purport to regulate activities of natural and legal persons under the jurisdiction of the Member States. By their extra-territorial application such laws, regulations and other legislative instruments violate international law and impede the attainment of the objectives of free movement of capital between Member States and third countries, including the removal of any restrictions on direct investment, including investment in real estate, establishment, the provision of financial services or the admission of securities to capital markets. The proposed Regulation stipulates that, under exceptional circumstances, it is necessary to protect the established legal order, the interests of the Union and the interests of the said natural and legal persons at Union level, in particular by removing, neutralising, blocking or otherwise countering the effects of the foreign legislation concerned. Delegated acts: under this proposal, the Commission should be empowered to adopt delegated acts in accordance with Article 290 TFEU for the purpose of amending Annex I to this Regulation as well as for establishing criteria for the authorisation of persons to comply fully or partially with any requirement or prohibition, including requests of foreign courts, in cases where non-compliance would seriously damage their interests or those of the Union.

(12) For the adoption of certain provisions of this Regulation the TFEU does not provide powers other than those of Article 352, The Commission proposal concerns recast of Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom 1. This regulation enables the Union to counteract the effects of extra-territorial legislation and rules adopted by third countries which can affect the interests of the Union, such as the Cuban Liberty and Democratic Solidarity Act of 1996 and the Iran and Libya Sanctions Act of 1996. The purpose of the recast technique is to consolidate a piece of legislation that has been amended several times into a single legislative act, thereby making it more accessible and reader friendly, whilst at the same time making substantive modifications to the text. Since its adoption Regulation 2271/96 has been amended twice, including the post-Lisbon alignment exercise to the provisions of Article 290 and 291 TFEU under the "Trade Omnibus I" (Regulation (EU) No 37/2014 of the European Parliament and of the Council of 15 January 2014 amending certain regulations relating to the common commercial policy as regards the procedures for the adoption of certain measures1). When adopting the "Trade Omnibus I" the Commission made a statement: "[...] In order to improve the legibility of the acts concerned, the Commission will propose a codification of the acts as expeditiously as possible once those two Regulations are adopted, and at the latest by 1 June 2014." The current proposal follows up on this Commission commitment. The recast technique has been used instead of codification because the Commission proposes two substantive amendments to Article 5 and 12 of Regulation 2271/96. These amendments empower the Commission to adopt delegated acts establishing the criteria for the application of the second paragraph of Article 5 which concerns situations where persons may be authorised to comply fully or partially with third country laws producing extraterritorial effects where the non-compliance would seriously damage their or the Union's interests. It should be noted that until now such criteria have never been adopted. The rapporteur considers that this Commission proposal respects Article 290 and 291 TFEU on the delimitation between delegated and implementing acts and recommends that it be followed. This is particularly supported by the latest case-law of the EU Court of Justice which recognises the important margin of discretion that the EU legislature has in making a choice between the recourse to delegated or implementing acts. The rapporteur proposes, however, one substantive amendment to the un-amended part of the proposal, namely, regarding the legal basis. The Commission has proposed Articles 64, 207(2) and 352 TFEU as the legal basis which cover the movement of capital to and from third countries, the common commercial policy and the so-called "flexibility clause" respectively and which were also the legal basis for Regulation 2271/96. Following a request by the Committee on International Trade, this proposed legal basis was examined by the Committee of Legal Affairs which concluded on 18 June 2015 that Articles 64(2) and 207(2) TFEU should be the appropriate legal basis and Article 352 TFEU should be excluded. Therefore an amendment has been proposed in this respect. Note: The content of this annex is not yet available and will be added at a later stage. ANNEX: OPINION OF THE CONSULTATIVE WORKING PARTY OF THE LEGAL SERVICES OF THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE FOR THE ATTENTION OF THE EUROPEAN PARLIAMENT Proposal for a regulation of the European Parliament and of the Council protecting against the effects of the extra-territorial application of legislation adopted by a third country and actions based thereon or resulting therefrom (recast) COM(2015)0048 of 5.11.2015 – 2015/0027(COD) Note: The content of this annex is not yet available and will be added at a later stage.deleted Or. en EXPLANATORY STATEMENT ANNEX: LETTER FROM THE COMMITTEE ON LEGAL AFFAIRS COMMISSION CONSULTATIVE WORKING PARTY OF THE LEGAL SERVICES Brussels, 11 November 2015 OPINION THE COUNCIL THE COMMISSION

Information which is by nature confidential or which is provided on a confidential basis shall be covered by the obligation of professional secrecy. It shall not be disclosed by the Commission or by the competent authorities of the Member States without the express permission of the person providing it.

Persons may be authorised, in accordance with Article 7(b) and the procedure referred to in Article 8, to comply fully or partially to the extent that non-compliance would seriously damage their interests or those of the Union . When there is sufficient evidence that non-compliance would cause serious damage to a natural or legal person, the Commission shall expeditiously submitWhere non-compliance would seriously damage the interests of persons referred to in Article 11 or those of the Union, the Commission shall adopt implementing acts authorising those persons to comply fully or partially with requirements, prohibitions or requests as referred to in the first paragraph of this Article. Those implementing acts shall be adopted by means of the examination procedure in legal person, the Commission shall expeditiously submit to the committee referred to in Article 8 (1) the draft implementing act. When laying down the time limits with regard to the delivery by the Committee of its opinion, the Commission shall take fully into account the time limits which have to thbe committee the terms of this Regulplied with by the persons which are to be subject of an authorisation.

(b) grant authorisation under the conditions referred to in Article 5 and, when laying down the time limits with regard to the delivery by the Committee of its opinion, take fully into account the time limits which have to be complied with by the persons which are to be subject of an authorisation;deleted

1. For the purpose of implementing Article 7(b), tThe Commission shall be assisted by the Committee on Extra-territorial Legislation. Implementing acts shall be adopted in accordance with the examination procedure referred to in paragraph 2 of this Article. That Committee shall be a committee within the meaning of Regulation (EU) No 182/2011.

2. The power to adopt delegated acts referred to in Article 1 and in Article 5 shall be conferred on the Commission for a period of five years from 20 February 2014the date of entry into force of this Regulation. The Commission shall draw up a report in respect of the delegation of power not later than nine months before the end of the five-year period. The delegation of power shall be tacitly extended for periods of an identical duration, unlessextension not later than three months before the end of each period.

PURPOSE: to undertake a codification of Council
Regulation (EC) No 2271/96 protecting against the effects of the
extra-territorial application of legislation adopted by a third
country, and actions based thereon or resulting
therefrom.

PROPOSED ACT: Regulation of the European Parliament
and of the Council.

ROLE OF THE EUROPEAN PARLIAMENT: The European
Parliament decides in accordance with the ordinary legislative
procedure and on an equal footing with the Council.

BACKGROUND: Council Regulation (EC) No 2271/96 has
been substantially amended several times. Since further amendments
are to be made, that Regulation should be recast in the interests
of clarity.

For this reason a codification of rules that have
frequently been amended is also essential if the law is to be clear
and transparent.

CONTENT: the purpose of this proposal is to undertake
a codification of Council Regulation (EC) No 2271/96 of 22
November 1996. The new Regulation will supersede the various acts
incorporated in it, fully preserving the content of the acts being
codified.

At the same time, it is also appropriate to make
certain substantive amendments to Regulation (EC) No 2271/96, with
a view to delegating powers to the Commission. Therefore, the
proposal is being presented in the form of a
recast.

Develop world trade and progressive abolition of
restrictions on international trade:
the proposed Regulation provides seeks to provide protection
against and counteracts the effects of the extra-territorial
application of the laws, regulations and other legislative
instruments specified in Annex I, and of actions based thereon or
resulting therefrom, where such application affects the interests
of persons, referred to in the Regulation, engaging in
international trade and/or the movement of capital and related
commercial activities between the Union and third
countries.

A third country (the United States of America) has
enacted certain laws, regulations and other legislative instruments
which purport to regulate activities of natural and legal persons
under the jurisdiction of the Member States.

By their extra-territorial application such laws,
regulations and other legislative instruments violate international
law and impede the attainment of the objectives of free movement of
capital between Member States and third countries, including the
removal of any restrictions on direct investment, including
investment in real estate, establishment, the provision of
financial services or the admission of securities to capital
markets.

The proposed Regulation stipulates that, under
exceptional circumstances, it is necessary to protect the
established legal order, the interests of the Union and the
interests of the said natural and legal persons at Union level, in
particular by removing, neutralising, blocking or otherwise
countering the effects of the foreign legislation
concerned.

Delegated acts: under
this proposal, the Commission should be empowered to adopt
delegated acts in accordance with Article 290 TFEU for the purpose
of amending Annex I to this Regulation as well as for establishing
criteria for the authorisation of persons to comply fully or
partially with any requirement or prohibition, including requests
of foreign courts, in cases where non-compliance would seriously
damage their interests or those of the Union.